1.4. "How can I afford to travel?"

Lots of travelers seem to want a magic bullet for travel costs: "How can I go on fancy
tours or cruises, or go to big cities or major tourist destinations in expensive countries
like those in Western Europe, stay in five-star hotels, and have everything be
cheaper?"

There are some money-saving tips that can cut the cost of this sort of travel to these
sorts of places, but let's not lose the forest for the trees. Two things, above all else,
will
determine how expensive or how affordable your travel will be. Compared to these, the
impact
on your travel bottom line of other strategies for cutting costs is trivial.

Do you travel to rich, and therefore expensive, places? Or do you travel to
poor, and therefore cheap, places?

Travel is a "service industry." When you travel, most of what you're paying for is for
people to do things for you: cook and serve your food, clean the rooms and make the
beds in the hotel, drive or guide you around, and so forth. Most of the cost of travel
services is the cost of labor. What this means is that the cost of local travel services
in
a particular country is almost purely a function of local wage scales. And the
differences between First World than Third World wages are so extreme that which
world you travel in makes much, much more difference to your costs than how thriftily
you travel.

Do you prearrange services through intermediaries in the First World? Or
do you arrange as little as possible other than air tickets in advance, and
arrange and pay for accommodations and other services locally, as close
as possible to the people and places where and by whom those services
are actually provided?

The premium you have to pay to arrange things in advance is highest for travel in
countries where local services are cheapest. That's because the foreign intermediaries
(tour operators, travel agents, etc.) in the First World have dollar or other
hard-currency,
high-wage, costs and expenses to cover: rent and overhead for an office in the USA,
salaries for staff in the USA to handle your reservations, commissions in U.S. dollars to
travel agents in the USA to represent them, a guide based in the USA or Europe to
accompany the tour, and so forth. These are real costs inherent in making it possible
for you to make reservations in advance from the USA. But these transaction costs far
exceed the actual costs of services provided by local people at local wages in a Third
World destination country.

In addition, only the more expensive local Third World tour companies and
accommodations providers can afford to be connected to a computerized reservation
system, maintain a foreign hard-currency bank account, or pay commissions to foreign
travel agents. Even in wealthy countries there is usually an entire layer of local
hostelries, guest houses, and freelance guides who aren't set up to take reservations
through travel agencies or tour companies from abroad, and who have fundamentally
lower costs and prices as a result. The cheapest hotel room in a major city that can be
reserved from abroad may be five or 50 times the cost of the cheapest bed available
locally.